The production of generic drugs in India: A new trade agreement with the EU would hinder access to drugs in developing countries

The European Union is negotiating a trade agreement with India, the consequences of which will be serious for billions of people living in developing countries. Government officials in India are focused on economic growth and are keen to complete a trade deal with the EU. In exchange for market access in other areas of the economy, the EU wants India, a country with very low per capita incomes, to embrace tough new rules on ownership and enforcement of intellectual property for medical inventions.

The negotiation is between two very different entities. The EU is now the world’s largest economy; its gross domestic product (GDP) was estimated at more than $16.4 trillion (£10.2 trillion; €11.8 trillion) in 2009—about 28% of the entire world’s GDP.

India has a large population—estimated at nearly 1.16 billion in 2009, or 17% of the world’s population. This is also about the same as the population of Europe plus all other countries in the Organisation for Economic Co-operation and Development combined.

India’s GDP was estimated at $1.3 trillion in 2009, about 8% of the size of the EU economy. On a per capita basis, Indian incomes were 3.5% of those in Europe. At the bottom of the income distribution, the differences are even more stark. An estimated 317 million Indians live with incomes below the official poverty line—$12 a month for urban areas and $8 a month for rural areas.

In 1970, India eliminated patents on drug products.[1] This move enabled India, a country with a relatively large domestic market, to develop a strong generic drug industry. In 1994 the World Trade Organization negotiated the controversial Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).[2][3][4] India was required to extend patent protection to drugs and to implement other new obligations. In 2005 India implemented the changes required by the World Trade Organization. In doing so, India limited patents in some areas, such as those on new uses or new formulations of drugs unless they differ greatly in properties related to efficacy. As interpreted by the Indian courts, it is now more difficult for international companies to prevent the manufacture of generic drugs by making minor changes to the formulation of products or finding new uses for them. These changes meant that Novartis could not obtain patent protection of a new formulation of the cancer drug, imatinib, and Abbott could not stop the manufacture of generic heat stabilised versions of the AIDS drugs, ritonavir and lopinavir. Taken together, the policies in place in India today provide important flexibility in the law and make it possible to produce more generic drugs.[3][5][6]

How do EU rules apply in Europe? Europe now grants up to 11 years of exclusive rights to rely on data from clinical trials and other tests in the context of drug registration.[7] During this period of exclusive rights, generic manufacturers cannot rely on the information used to first register the drug and must repeat costly and time consuming clinical trials, making it difficult or impossible to register the generic version of the drug. This regulatory monopoly operates outside and independently of the patent system. Trade officials in Europe want India to implement a similar regimen.[8]

If implemented in India, this intellectual property protection regimen would be more restrictive than patents. An absolute monopoly right provides no safeguards against abuses, and nor does it allow any possibility for the state to order licensing of the rights in the test data, as can be done for a patent. As noted, it is costly and time consuming to duplicate clinical trials and doing so often violates ethical standards relating to unnecessary repetition of scientific tests on humans.[9] In the absence of regulatory pathways that permit manufacturers to rely on existing evidence of safety and efficacy, no new generic drug could be sold in India without the permission of the company that owned the rights to the data used to register the brand name version of the drug. This limitation would dramatically shrink the global market for inexpensive generic drugs during the first 11 years of a new drug. This is important for people living in India, especially the hundreds of millions who live on less than $2 a day, but it would also have an enormous impact on the entire developing world. Why? The manufacture of generic drugs typically involves high fixed costs in the start-up phase and strong economies of scale. Few developing countries have a large enough domestic market to attract and stimulate entry by suppliers of generic drugs. India does. Bangladesh, Nicaragua, Kenya, South Africa, the Philippines, Thailand, and others do not.

If the EU can remove India as a legal market for early production of generic drugs it is likely that a big enough market will not exist anywhere. Even if other developing countries can resist trade pressures to adopt restrictive rules on patents or regulatory test data, they will not be able to turn to India to find affordable supplies of the drugs.

Trade officials in the EU promised—in the 2001 Doha Declaration on TRIPS and Public Health,[10] and in the 2008 World Health Organization Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property[11]—that governments would implement intellectual property rules in such a way to “protect public health and, in particular, to promote access to medicines for all.” If the EU pushes for more extensive protection of patents than is required by the World Trade Organization, and for new exclusive rights in drug test data, it will make a mockery of these promises.

How important are the Indian generic drug manufacturers? From 2003 to 2008, in programmes supported by donor organisations like the Global Fund, Indian generic drugs accounted for more than 80% of the drugs used to treat AIDS, including 91% of paediatric antiretroviral products, and 89% of the adult nucleoside and non-nucleoside reverse transcriptase inhibitor markets.[12] India is also the most important source of generic drugs for cancer, heart disease, and other diseases and conditions.

The EU is currently negotiating the intellectual property chapter of its trade agreement with India in secrecy, despite the high interest and its enormous importance for billions of people living in developing countries. It is regrettable that an agreement that will have such an important effect on the human rights of billions of people is being negotiated in secret, and even more regrettable that the EU has asked India to sacrifice access to life saving drugs for market access in other areas of the economy. Political and civic leaders from Europe and around the world must appeal to the EU to avoid outcomes that make it even more difficult to manufacture and market inexpensive drugs in developing countries. This can begin by eliminating demands that India adopt exclusive rights on drug test data, or lower its standards for granting patents on medical inventions.

Notes
Cite this as: BMJ 2011;342:d1694

Footnotes
Competing interests: The author has completed the Unified Competing Interest form at www.icmje.org/coi_disclosure.pdf (available on request from the corresponding author) and declares: no support from any organisation for the submitted work; no financial relationships with any organisations that might have an interest in the submitted work in the previous three years; he is employed at Knowledge Ecology International, a non-profit consumer and human rights organisation that has been active in debates on access to medicine; has been a paid consultant to the Global Fund for AIDS, TB, and Malaria, and the UN Human Rights Council, and has also served in an unpaid capacity on several boards and committees of non-profit organisations that focus on access to drugs and policies on intellectual property rights.